A look at Saudi Arabia and WTO : Opportunities and Challenges :
As the world’s largest oil exporter, the 23rd largest importer, and the largest economy in the Middle
East, Saudi Arabia is a global trade power and as such the Kingdom’s absence from the World Trade
Organization (WTO) has been an obvious shortcoming in the global trade system. This was rectified on
11 December 2005 when Saudi Arabia became the 149th member of the WTO after over 12 years of
negotiations. In the process of preparing for membership,Saudi Arabia enacted 42 new trade-related
laws, created nine new regulatory bodies, and signed 38 bilateral trade agreements. When the Kingdom first applied for membership in ...view middle of the document...
About 40% of GDP comes from the private sector. About 6.5million foreign workers play an important role in the Saudi economy, for example, in the oil and service sectors. The government is encouraging private sector growth to lessen the kingdom's dependence on oil and increase employment opportunities for the swelling Saudi population which is considered to be one of the highest in the world estimated at 2.7% to 3.1% annually. In 2012 Saudi Arabia's GDP was USD 711 billion. Saudi Arabia's GDP grew at 5.10% in 2012. GDP per capita, in purchasing power-adjusted dollar terms, is USD 30,477.Inflation in Saudi-Arabia, as measured by the change in consumer price index, was 4.50% in 2012, versus 5.00% in 2011. Unemployment in Saudi Arabia in 2006 was 6.30%, versus 6.10% in 2005.Saudi Arabia's economy is mainly manufacturing based. Agriculture accounts for 2.49% of GDP and employs 4.10% of the population.
Manufacturing and industry accounts for 59.75% of GDP and employs 20.40% of the population.
Services accounts for 43.37% of the GDP and employs 34.60% of the population. Saudi Arabia's total
exports in 2011 were USD 364.70 billion while its total imports were USD 131.59 billion. Saudi Arabia's government revenues are 53.30% of GDP while its government spending is 39.34% of
GDP. Thus Saudi-Arabia's government runs a surplus of 14.08% of GDP. By listing a brief facts about Saudi Arabia , we can now identify opportunities and challenges facing joining the WTO agreement. Saudi Arabia has one obvious comparative advantage which is power resources which by joining WTO can boost the growth in this sector. However some economist addressed several issues and challenges facing the economy in the long term which should be considered. Some argue the Saudi Arabia is not ready yet to join WTO until is fix its internal regulatory frame work and infrastructure to attract FDI and promote for a competitive environment that can lead to cheaper access products. The first argument of encouraging and speeding up the process of joining the WTO particular with EU is based on many facts. First , the comparative advantage of power resources such as oil, gas, chemicals and petrochemicals which are much cheaper to produce in Saudi Arabia. For example , it cost about $2 to produce a barrel of oil than in Germany where it costs on average $ 65 (based on international oil prices). The implications behind such a fact support the petrochemical industry where they have an advantage over European manufactures. The tariff waiver and the logistic factor makes the European
market an attractive market for local producers. This will boost growth and position petrochemical industries to have a leading role globally which is now headed by German producers. Another identified comparative advantage would be supporting the export of local produced products that relays on petrochemicals such as Plastics related industries which has almost the same advantages and can easily compete. The...